Earlier quoted context omitted.
This comment above does a better job than I did at explaining why the staking incentive is somewhat flawed: https://news.ycombinator.com/item?id=26810686
> PoS is closed-membership with a veneer of open-membership, because the means of coin production are tied to owning a coin already. What this means in practice is that no rational coin-owner is going to sell you coins at a fast enough rate that you'll be able to increase your means of coin production It seems to me like they're arguing that PoW is more egalitarian/decentralized, which may be a fair point. But using…
Coinbase from YC to DPO
421–430 of 883 posts
Re: Coinbase from YC to DPO
#422Earlier quoted context omitted.
In theory yes. In practice, cashing out billions of dollars worth of stocks is easier than cashing out billions of dollars worth of crypto.
You wouldn't be selling those on the open market, institutions have been able to acquire billions of dollars worth of crypto OTC without moving markets. Another option is, now that it's becoming clear to people that Bitcoin is here to stay, you can just borrow against it to spend (avoid taxes, hold on to the upside). Case in point, this person/group borrowed 300M$ with about 1B$ net worth[1]. 1: https://defiexplore.c…
It's also kind of unclear what the interest is from that page. edit: apparently it's 8.5% https://mkr.tools/governance/stabilityfee
Re: Coinbase from YC to DPO
#423Earlier quoted context omitted.
It does remove any question of who you are for coinbase, but bitcoin was only ever pseudonymous transactions, not fully anonymous. We can all see how each wallet behaves.
and in an "audit" or "government" scenario, your Coinbase wallet is linked to your driver's license + checking account, right? Do we know if Coinbase would cooperate with US government in such a situation? I would imagine they would. I'd imagine they are also going to be sending IRS 1099-like forms for all crypto transactions, right?
Every transaction is part of the public ledger. If you ever want to get money in or out from fiat you need some point that is going to require ID.
You could try and avoid this doing in person and cash, but if make any mistake ever your entire history of transactions is known.
Some people have tried to do things to obscure this (coin mixing), some coins exist to do something clever to make it private, but BTC isn't and the other stuff doesn't really work.
Coinbase is great because the original exchanges like "Magic The Gathering Exchange" (Mt. Gox) were amateur hour, they were routinely hacked and lost everyone's money. Coinbase was the first real company that showed up and did what they were supposed to do. They also made things easy with good UI.
I think this is partly because in the Mt. Gox days it wasn't taken too seriously, (most) people were playing with it because they thought it was cool not because they expected it to grow in to a trillion dollar monster.
Re: Coinbase from YC to DPO
#424Earlier quoted context omitted.
You wouldn't be selling those on the open market, institutions have been able to acquire billions of dollars worth of crypto OTC without moving markets. Another option is, now that it's becoming clear to people that Bitcoin is here to stay, you can just borrow against it to spend (avoid taxes, hold on to the upside). Case in point, this person/group borrowed 300M$ with about 1B$ net worth[1]. 1: https://defiexplore.c…
I'm new to this. Is the collateral locked into the contract and unspendable until the contract is closed? It's also kind of unclear what the interest is from that page. edit: apparently it's 8.5% https://mkr.tools/governance/stabilityfee
There are also centralized versions with blockfi if you prefer traditional loans.
Re: Coinbase from YC to DPO
#425And down bitcoin goes. $3k off the highs. If given a choice between 1 million to invest in in a large cap growth stock portfolio vs. Bitcoin, I would choose the stock portfolio every time. Crypto too volatile relative to upside. Airbnb and other big tech growth stocks have much smoother returns which can be magnified with some leverage strategies.
Re: Coinbase from YC to DPO
#426Earlier quoted context omitted.
One important difference in favour of PoS that isn't brought up often is the financial cost to pull off an attack. Pulling off an attack in most PoS protocols results in coin slashing for the attacker ("deletion" of coins used in the attack) and on top of that can (and likely will) result in coin devaluation as well. This makes a successful attack against a PoS system very very expensive. The resource is spent and ac…
It's far easier to break a PoS chain -- you simply knock the coin-holding nodes offline. Knock enough offline, and you can no longer reach quorum. If offline nodes' coins get slashed in order to reach quorum and restart block production, and the system permits forking, then why would offline nodes rejoin the original fork? They're incentivized to only consider forks where they're not slashed. If the system does not p…
Most PoS algorithms I've seen instead reserve stake slashing as a penalty for malicious behaviour. Going offline isn't by any means inherently malicious. There are however plenty of actively malicious actions that can be detected and reacted against. Often for the more severe penalties it will require some level of community involvement in the recovery stage to limit opportunities for abuse.
Additionally, it shouldn't be easy to take a block producer offline and Stake Pool(or node) Operators should be preparing for these types of attacks. I've been watching some of the work being done in the Cardano Stake Pool Operator community and the various SPO guilds have decently sophisticated architectures. "Nodes"/"Pools" are broken up into Relays, Producers, and sometimes additionally Key Generators. Key Generators produce the periodically expiring KES keys and pass them to the Producers on a schedule (to minimise potential attack surfaces). The Producers actually engage in the consensus using the keys provided by the key generators and communicate through the relays. The Relays handle the throughput and communication. This allows the producers (and by extension the key generators if used) to be largely shielded from the open net. This also allows producers and relays to have a certain amount of redundancy/failover. An architecture like that may cost more (and eat into rewards a bit more) however they are far more difficult to DDoS or compromise.
Since the barrier for the hardware is so low, a 1x2x2 or 1x2x3 (keygen x producer x relay) architecture can still be more than profitable (retaining 25% to 75% of the SPO rewards as profit). Additionally this has the advantage that various other income streams can be integrated in (state channel operation, compute nodes, storage nodes, etc) over time and the operation can be scaled up without compromising security or requiring a significant re-architecture.
Proof of Stake can be just as secure as Proof of Work but it requires that the incentives be structured properly and sufficiently hedged against potential risks.
Re: Coinbase from YC to DPO
#427Earlier quoted context omitted.
.. Again that's all good in theory but in practice you can verify by trading. My orders do get filled faster on Binance, I can take advantage of the better spread and liquidity etc. The majority of orders aren't just disappearing randomly or anything. It's especially obvious when trading higher amounts or trading a smaller liquidity token in the first place. Maybe I can't verify the actual numbers but I can very much…
No you cannot verify by trading lol, any more than you can verify the payout ratio of a slot machine at a rigged casino. They can synthesize opening and closing the orders, matching them internally, based off a feed from a legitimate exchange. Since they control everything they can easily ensure they don't accidentally get matched to an external order. This gives the illusion of liquidity.
If I use a slot machine a million times and I get higher payouts than at the casino next door, why should I consider it rigged?
This is just nonsense. I am getting all the benefits of high liquidity and volume, my orders actually execute and I take advantage of the smaller spread. You can posit whatever you want, but the more likely explanation is that the volume is indeed higher.
Re: Coinbase from YC to DPO
#428Earlier quoted context omitted.
Plenty of exchanges out there, so I would say yes.
but Gemini is the only other regulated US one. Coinbase is huge, even bigger than binance. Something like 50 million ppl have an account. Ppl wondered why the July 2020 Twitter hacker made so little. The reason is, coinabse blocked withdrawals to the hacker address, which if they hadn't, the hackers would have made 3x more..so let that sink in..
Re: Coinbase from YC to DPO
#429Earlier quoted context omitted.
>also airbnb is not dependent on the value of a speculative asset. What do you think US real estate is?
I can live in a house. I can't live in a Bitcoin.
Bitcoin as chaos insurance (or schmuck insurance as Chamath calls it) is the use case that makes the most sense to me.
Re: Coinbase from YC to DPO
#430Earlier quoted context omitted.
Wow. Assuming he put in just $10,000 (and I imagine it was probably more than that), 6000x return would be 60 million dollars. Any early companies out there right now seem like it could potentially offer even a 10th of that in ~5-10 years?
i dunno how people say VCs have a return of only 9% year when Ycombinator is absolutely crushing that even with a high failure rate. AirBNB, box, dropbox, coinbase, etc. Paul stumbled on an absolute goldmine by just giving a bunch of promising companies with good founders 10k in exchange for a decent portion of equity and then some of these companies being worth billions. NOw you know what those homes and are so expe…
But remember that unlike the stock market, investing in a VC means locking up your money for 10 years. Slightly beating the market is not worth the liquidity loss, you have to do a good bit better.